Investors are holding their breath as they await further details on U.S. President Trump's reciprocal tariff plan and Federal Reserve Chairman Jerome Powell's testimony. On Monday, global stock markets appeared to shake off initial fears regarding the tariffs. However, the financial landscape shifted as 25% levies on steel and aluminum imports, including finished products, came into effect late Monday night. This has led to a cautious tone permeating financial markets as futures markets began to decline following the enforcement of these levies.
The impact of the new tariffs is already noticeable in stock market predictions. The S&P 500 and the Eurostoxx 50 index are both expected to open lower, reflecting investor unease. The focus is also turning towards Powell's upcoming testimony, which could provide insight into future monetary policy amidst these trade tensions.
Meanwhile, gold prices experienced a downward correction from their record-high of $2,942 during the Asian session on Tuesday. Despite this dip, gold managed to maintain its position above $2,900. Analysts attribute this correction to a modest strengthening of the USD, which prompted some intraday profit-taking.
Currency markets are also feeling the effects of the tariffs and investor caution. The EUR/USD pair clings to small daily gains, holding above 1.0300 on Tuesday. In contrast, the GBP/USD is struggling, trading in negative territory around 1.2350. This cautious stance in the markets comes after President Trump raised import duties on steel and aluminum imports to a flat rate of 25%.
As market participants navigate this uncertain terrain, all eyes are on Fed Chairman Powell's testimony for potential guidance. The strategic shifts in tariffs and their subsequent impact on financial markets underscore the complexity and interconnectivity of global economics.